Indian Finance Minister Nirmala Sitharaman outlined an ambitious vision for the Indian economy, projecting a significant increase in the country’s per capita income. She anticipates that within the next five years, India’s per capita income will rise by US$2,000 (approx. INR 1,68,046), as per IMF projections. This optimistic forecast is rooted in the nation’s ongoing economic reforms and the untapped potential of its young population.
Addressing the Kautilya Economic Conclave in New Delhi, Union Finance Minister Nirmala Sitharaman said, “India finds itself amidst the global geopolitical repositioning effort which has been going on. This repositioning can act as a structural force to India’s advantage by creating robust supply chains with countries with strategic congruence. India benefits from the new international order which is reshaping better to reflect the power distribution of today’s world.”
“While it took us 75 years to reach a per capita income of US$2,730, as per IMF projections, it will take only five years to add another US$2,000”, she said.
Sitharaman highlighted the demographic advantage India holds, with 43% of its population being under the age of 24.
“As of now, 43 per cent of Indians are younger than 24 years old, and they have yet to explore their consumption behaviour fully”
Indian Finance Minister Nirmala Sitharaman
This young demographic has yet to fully explore their consumption potential, which is expected to drive organic growth in the economy. As these young individuals transition into full-fledged consumers, their spending habits will significantly boost domestic demand. This, coupled with a rising middle class, is anticipated to create a vibrant marketplace, attracting foreign investments and fostering economic growth.
The minister emphasized that the economic and structural reforms implemented over the past decade are beginning to show results. As the effects of the COVID-19 pandemic recede, these reforms are expected to manifest more thoroughly in economic data, contributing to improved living standards. Sitharaman described the upcoming decades as a “period-defining era” for India, with the steepest rise in living standards for the common man.
“I expect these improvements to continue as the effects of the last ten years of economic and structural reforms manifest more thoroughly in the data in the coming years as the Covid shock fades from the economy,” she said.
Despite the optimistic outlook, Sitharaman acknowledged the challenges that could impede progress. Persistent geopolitical tensions and the disruptive impact of artificial intelligence (AI) on the job market are significant concerns.
The Economic Survey 2023-24 underscored the transformative impact of AI, highlighting the need for collaboration between the government and private sectors to harness this technology for job creation. The minister stressed the importance of developing domestic capacity to navigate these challenges and achieve the country’s ambitious economic goals.
“While India’s economic performance is credible, there are certain challenges, including geopolitical ones and the advent of artificial intelligence, which may pose a threat to prosperity.”
Indian Finance Minister Nirmala Sitharaman
A key aspect of Sitharaman’s vision is maintaining fiscal discipline. She projected a decline in the fiscal deficit from 5.6% of GDP in FY24 to 4.9% in FY25, driven by buoyant revenue generation, restrained revenue expenditure growth, and healthy economic activity. This commitment to fiscal discipline is expected to keep bond yields in check and lower economy-wide borrowing costs, contributing to overall economic stability.
“Aided by buoyant revenue generation, restrained revenue expenditure growth and healthy economic activity, the fiscal deficit is estimated to decline further from 5.6 per cent of GDP in FY24 (provisional actuals) to 4.9 per cent in FY25. The commitment to fiscal discipline will not only help keep bond yields in check but will translate to lower economy-wide borrowing costs”
India’s Finance Minister Nirmala Sitharaman
PM Modi also delivered an address at the Kautilya Economic Conclave and said that the Indian economy is undergoing transformational change to sustain high growth.
PM Modi highlighted that the conclave is being held at a time of escalating conflicts in the world, and that the conflict-struck West Asia and European regions are essential for the global economy.
“Amid this big global uncertainty, we are here discussing ‘The Indian Era’. It shows that today the trust in India is of a different level”
Prime Minister Narendra Modi
PM Modi emphasized on the growth of Indian Economy on the world stage, “In less than 10 years, India has reached 39th position from 81st in Global Innovation Index’s ranking… Today, the Indian economy is going through a very big transformational change based on strong economic fundamentals, Indian economy is on the path of sustained high growth. India isn’t only preparing to reach on the top but working hard to remain there on the top…”
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